Fitch Affirms DuPont's IDR at 'A'; Short-Term Debt at 'F1'; Outlook Stable.CHICAGO -- Fitch has affirmed the ratings of E.I Dupont de Nemours and Company's DuPont as follows: --Issuer Default Rating (IDR IDR In currencies, this is the abbreviation for the Indonesian Rupiah. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. ) at 'A'; --Senior unsecured debt Unsecured debt Debt that does not identify specific assets that the debtholder is entitled to in case of default. at 'A" --Bank credit facility at 'A'; --Short-term debt rating at 'F1'. The ratings apply to approximately $7.5 billion of debt. The Outlook on the long-term ratings is Stable. The affirmations reflect DuPont's improvement in all segments except the struggling Ag & Nutrition. Most segments have had year over year volume growth and modest increase in operating margins. Margin expansion in some segments has been hampered by volatile energy costs and raw material costs. Supporting the ratings are DuPont's leading market positions in several key areas, strong liquidity and easy access to capital markets. Even though the company's credit metrics have improved, they still remain weak for the rating category. Fitch also expects further improvement in revenues and net income in the 2007, provided that the U.S. economy does not stumble. The Stable Rating Outlook reflects Fitch's expectations of improvement across several key growth platforms This article or section needs sources or references that appear in reliable, third-party publications. Alone, primary sources and sources affiliated with the subject of this article are not sufficient for an accurate encyclopedia article. and DuPont's cost cutting initiative. Fitch expects DuPont's cash flow to continue to improve, barring any major change in business conditions. The chemicals sector is still showing strength and it's expected that DuPont will continue to show margin improvement as the company continues its cost control program. Despite the recent softening of energy and raw material costs, Fitch still remains concerned about the volatility of these costs. DuPont's credit statistics improved during the 12-months ending Sept. 30, 2006 due to substantial improvement in Operating EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become and modest debt reduction, with Operating EBITDA-to-interest incurred of 7.95 times (x), and debt-to-EBITDA of 2.07x at Sept. 30, 2006. Balance sheet debt was approximately $7.5 billion as of Dec. 31, 2006. DuPont has a cash balance of $1.9 billion including marketable securities Marketable Securities Very liquid securities that can be converted into cash quickly at a reasonable price. Notes: Marketable securities are very liquid as they tend to have maturities less than one year, and the rate at which these securities can be bought or sold has at December 31, 2006, and excellent liquidity with unused and committed credit facilities with various U.S. and foreign banks. Fitch anticipates that the cash balance will decline with the repayment of debt in 2007. Fitch expects DuPont's cash flow to continue to be stressed in 2007 as they complete the stock repurchase Stock repurchase A firm's repurchase of outstanding shares of its common stock. program. DuPont is the second largest chemical company in North America, with leading market share in a number of specialty chemical segments. The United States accounts for 42% of sales, Europe 29%, Asia Pacific 17% and Canada & Latin America accounts for 12%. Chemical operations are highly integrated resulting in cost advantages across the business cycle. Business segments are agriculture & nutrition, coatings & color technologies, electronic & communication technologies, performance materials and safety & protection. In 2006, DuPont had $27.42 billion in consolidated net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight and $3.33 billion in Pretax Operating Income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. . Fitch's rating definitions and the terms of use Terms of Use are rules set up by the owner of an intellectual property or service to govern how they may be legally used. In many cases, terms of service are used as a contractual agreement between a company and users of a service they provide. of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental are also available from the 'Code of Conduct' section of this site. |
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